Cloud-based business applications, especially those related to CRM, are garnering considerable attention from U.S. small and mid-sized businesses (SMBs), according to new research from AMI-Partners.

In its latest "U.S. SMB Cloud Services Study," AMI determined that the software-as-a-service (SaaS) CRM market—already representing 570,000 U.S. SMB firms—is set to undergo double-digit year-over-year growth in the next five years. Spending on SaaS CRM will outpace on-premises CRM by nearly four to one, the firm predicts.

According to AMI's figures, last year, spending on on-premises CRM solutions was $1.3 billion, or 70 percent of the total CRM market, while SaaS-based solutions accounted for 30 percent of the market, or $519 million.

Jacqueline Atkinson, research director at AMI, says that "specific to SMBs, many factors have shifted the market toward increased adoption of SaaS applications," including a greater availability of broadband Internet connectivity and the proliferation of wireless-enabled mobile devices.

The economy is another factor. "Pressures from a down market have moved SMB owners and executives to drive out costs while broadening efficiency," she says. "While certain applications, such as hosted email, have captured a larger market share, we're seeing an expansion for other business applications, such as CRM, business intelligence, and accounting."

Atkinson notes also that "the advent of cloud services has allowed SMBs to acquire enterprise-class solutions, such as CRM, at significantly less cost. Depending on the number of users, the savings over on-premises CRM software could total hundreds of thousands of dollars during an average five-year period.

"SaaS CRM reduces the overall investment by eliminating such added costs as software licenses, dedicated servers, maintenance fees, and upgrades, not to mention internal IT support personnel."

Also driving the push is a greater use of social media as a CRM tool. "More and more SMBs are attempting to attract and retain customers over social media channels," Atkinson explains. "Enterprise Social CRM can translate what these companies readily perceive on their social communities into actionable insights for timely business planning."

The report notes that SaaS CRM vendors offering a social component, such as Salesforce.com or Sage, "will be influential in moving SMBs toward leveraging social CRM. These vendors consequently are poised to capture more of this growing SaaS CRM market."

Beyond the social media realm, trailblazers in the overall SaaS market include Salesforce.com, Aplicor, and NetSuite, the report says.

"Nonetheless, today, SaaS solutions are near universal across all major software vendors," Atkinson adds. "Sage, SAP, Oracle, and Microsoft offer on-premises solutions, which are very relevant for a lot of enterprises, but have also captured a sizable share of the SaaS market with their hosted solutions."

It's not just SMBs that are adopting SaaS-based applications. CIO Insight's "Top IT Apps in 2012 and Beyond" reported that 33 percent of chief information officers and senior technology executives across the board plan to implement at least four SaaS/cloud applications within two years.

Of the types of applications being sought in an on-demand model, CRM ranked first in CIO Insight's study, followed by human resource management, billing and accounts payable, collaboration software, and e-commerce.

Also in demand will be tech tools to help companies manage data-volume growth. Fifty-seven percent of respondents expect data volume to increase 25 percent during the next 18 months.

Asked which applications they hoped to introduce in the next year, 39 percent said business intelligence/analytics, followed by productivity/collaboration (36 percent), sales (34 percent), financial (28 percent), and social media (27 percent).

Top 15 SaaS Business Applications

According to CIO Insight, the top 15 on-demand business applications systems are: